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Quest Means Business

Dow Up Strongly; Volkswagen Promises to Be Ruthless in Punishing Emissions Cheaters; Interview with Brazil's Finance Minister. Aired 5-6p ET

Aired October 28, 2015 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, HOST: All right. The Dow was up very strongly when it closed an hour ago. It was up the best part of 200 points, a gain of more

than 1%. When you look at the graph later you'll see how topsy-turvy it was. But trading is over. [Applause] You call that a gavel. A true wimpy

gavel on Wednesday, the 28th of October.

(BEGIN VIDEO CLIP)

QUEST: Tonight Volkswagen vows to be ruthless in punishing its emission cheaters. See you in December the Fed says wait and see on hiking rates.

And Brazil's finance minister faces calls to quit. Tonight she tells me, I'm going nowhere. I'm Richard Quest. We've got an hour together. And I

mean business.

(END VIDEO CLIP)

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QUEST: Good evening the day's business news in just a moment. But we have some breaking news from the United States. It concerns the runaway military

blimp. No it's not a poem or a song, it's actually an event that's happened on the ground in Pennsylvania.

The blimp became untethered in Maryland and it floated over some highly populated areas.

(BEGIN VIDEO CLIP)

QUEST: Two military F-16 fighter jets were scrambled to follow the airship. The serious part was that the cable that originally connected the blimp was

connected was still dragging on the ground or at least down and knocked out power lines. At least 20,000 people lost power.

Joining me now Tom Sater, at the World Weather Center.

(END VIDEO CLIP)

QUEST: There be an investigation into why the blimp lost its moorings, but where did it go and how high did it get?

TOM SATER, CNN METEOROLOGIST: That's a great question. I mean everything was getting scrambled in the air of course with F-16s.

Our first word that this was untethered which, by the way cables that are three centimeters in thickness and possibly more than one. We heard that

just northeast of Washington, in the city of Aberdeen, this is where the military proving grounds are.

(BEGIN VIDEO CLIP)

SATER: That we believe the blimp was at 16,000 feet. Remember the hurricane that made landfall in Mexico and flooded parts of Texas was joining hands

with another storm so there's been some moderate to even heavy rainfall.

We now then heard of course it was seen in Pennsylvania. So we looked at wind speed and the direction at 16,000 feet. Figure, Richard, about 48

kilometers per hour in its movement. Here's the concern with the F-16s. Moving from northeast Maryland toward the very populated region of the

northeast and, of course, air space, for air traffic controllers out of Newark, (inaudible) Laguardia, JFK and maybe Logan. Were they going to

shoot it down or were they going to allow it move off-shore in the Canadian Maritimes and then retrieve it over water. But that would have taken 8

hours.

But then we started to see pictures like you're seeing there of social media, and we said wait a minute this is not moving on those north easterly

winds. And the images were showing it wasn't at 16,000 it was just below the cloud deck, in the rain. Possibility that helped it.

So let's look at the winds at about 1,000 feet off the ground. Science is amazing. When you get in closer here from Aberdeen those winds do not go

northeast, they slide north and then toward the north-northwest. And that's where we have 24,000 without power. And can you imagine we're not sure just

how long the cables were. They could have been as long as 10,000 feet but we're not sure where it detached but we found it in the following county to

the west-northwest.

(END VIDEO CLIP)

SATER: So the story which was quite exciting and almost scary for a while there, came to an end in a corn field in north central Pennsylvania.

QUEST: I'm sure there's a parable of life there somewhere. It all ended in a corn field in the middle of the Midwest.

Tom Sater, at the World Weather Center.

QUEST: Volkswagen has suffered its first quarterly loss in 15 years.

(BEGIN VIDEO CLIP)

QUEST: The diesel emissions scandal, the charges that the company is taking against earnings wiped out the profits. When it took the charge against

earnings, it lost $1.9 billion in the third quarter. It was $7 billion on the charge. More costs to come. The CEO, Matthias Mueller says the company

must learn from this.

MATTHIAS MUELLER, CEO VOLKSWAGEN: I want us to take a constructive approach to mistakes. And I want us to embrace and foster courage and

entrepreneurial spirit. Each and every one of us must contribute to this new spirit. And I give you my word my board colleagues and I will set a

good example.

(END VIDEO CLIP)

QUEST: Volkswagen shares closed 4% higher which is slightly extraordinary, bearing in mind the loss. And more importantly the costs are likely to be

much higher.

[17:05:05]

CNN's Clare Sebastian is here. They've put aside a certain amount of money, Clare but nowhere near enough.

CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Right Richard. This is how much they've put aside, you mentioned it just now, $7.4 billion. And

this is what that is going to cover within that circle there.

(BEGIN VIDEO CLIP)

SEBASTIAN: There's the fixing of the cars that's the cost associated with the recall. And we've got some resale value there, that's the residual

values associated with the cars that Volkswagen leases or finances. And also help for dealers through these difficult times.

But crucially Richard, it's what's not inside that circle that really matters. What they haven't yet factored in.

We've got litigation, we've got customer compensation, over here we've got fines and penalties that they might face. Now that could range from

anything from civil penalties that they might face for not being in compliance for example with clean air standards in the U.S. Anything from

that to criminal penalties if they're found to have deliberately deceived regulators.

So this is what we know for certain. This is what they say they have set aside so far. The company itself admitting that might not be enough. But

we've got a worse case scenario too over here. This is what Credit Suisse says could happen. The costs could balloon to $86 billion.

Now take a closer look at where that could come from. We've got a quarter here for fixing the cars, the recall that we just talked about. Civil

penalties perhaps another quarter there and then what's called residual value, that's the re-sale value, that's the cars that VW leases that it

finances. If their value gets a hit, that goes on their balance sheet.

QUEST: All right so what is the -- what are the circumstances that goes from 7.4, all of the way to 86 billion. Because, as I understand it, nobody

believes that's the last number. Where are we in the middle?

SEBASTIAN: Well this is the worst-case scenario, so it could - it could end up not being that much. But the circumstances, are we've got investigations

going on all over the world. Germany, France, the U.S. these have been increasing in intensity. We've seen raids at corporate headquarters. We

also got the issue that these cars were sold as clean diesel and the customers now, you know believe that that - you know they have evidence

that that's no longer the case.

QUEST: And this is what we compare it to. Deep water horizon from BP 55 billion versus 86 billion. So what we're saying is it could be considered

more expensive?

SEBASTIAN: It could be. This really puts it in context here Richard, this was one of the biggest corporate disasters this side of the Millennium.

The main costs here came from litigation claims from the spill response. Environmental costs, of course, with the Gulf of Mexico and a fine related

to the Clean Water Act here in the U.S.

Now this lasted five years. This is the crucial thing, this is the real cautionary tale for Volkswagen. Five years since that spill and it only

just settled its outstanding claims and it said it could cost 55 billion in that earning release yesterday.

QUEST: And that's all we're looking at Clare, thank you very much in deed.

(END VIDEO CLIP)

QUEST: If we are going to put this to some perspective we've talked to a man who sells motor cars. And when they talk about motor cars, there's

nobody who sells more motor cars, than Mike Jackson. Good to see you.

MIKE JACKSON, CEO AUTONATION: Richard, how are you today? Good to see you.

QUEST: Oh auto nation, you're in the C suite with me.

So your results were very good, we'll talk about your results in a second but Volkswagen. What a mess.

JACKSON: Richard I think it's going to prove to be the largest deliberate fraud in the history of the automobile industry, maybe in the history of

business. This wasn't an act of negligence, this wasn't poor judgment, this was a deliberate attempt to deceive and defraud.

QUEST: Right. Now. In terms of that -- in terms of that deliberate attempt, but it doesn't seem to be affecting sales, does it?

JACKSON: No.

QUEST: What are you hearing?

JACKSON: Well we're selling them.

QUEST: Right, what are you hearing?

JACKSON: Sales are overall fine, other than we can't sell vehicles with a TDI diesel engine, so you have a certain percentage of your inventory on

hold. But, if you adjust for that, sales are fine. Which means if VW handles the crisis correctly, they will get through this storm.

QUEST: What does that mean - what does that mean? Handle it correctly?

JACKSON: And I'm convinced -- Well, I think they've taken all of the correct steps thus far. They've been very forth right, that something very

wrong happened and they were going to address all of the stakeholders and that includes the customers. And the customers are very upset.

Because, Richard, these people are passionate about green technology and they wake up one day and find out they've been polluted. So they weren't

trying to save money with fuel efficiency, they were trying to save the planet and now all of a sudden they find out they didn't. So they feel

mislead and defrauded. So, you have customers. Then you have shareholders who bought the stocks. You have dealers.

QUEST: Are they confused like you?

JACKSON: You have dealers.

QUEST: Are you mad?

JACKSON: No. I'm not. I'm more shocked and dismayed. And then I quickly turned the page and said, OK, how do we - how do we comprehensively address

this?

QUEST: I need to ask you one other matter. The Fed. We're going to be talking about big time the Fed in a moment. Interest rates remain on hold.

You are a member. You're the deputy chairman of the Atlanta Fed.

JACKSON: Yes, I am, indeed. So I have a point of view.

QUEST: Go on.

JACKSON: I would express it as my opinion, and I think it's very simple. The U.S. economy is not in a crisis anymore and zero percent rates are a

crisis rate of which distortions come with as far as allocation of capital. And while the growth isn't as fast as everyone would like. We should move

off of crisis rate, and send a message to America, to the American people, you know what? The crisis is over. It's not as good as we'd like it to be

but the crisis is over.

[17:10:28]

QUEST: You're like a (inaudible), not a -- a hawk I meant to say.

JACKSON: Yes, yes, let's be careful there. And I'm talking I have -- listen, Richard. I have 4 billion of floating debt. So you know I could you

know -- my argument should be to hold rates.

But if i look at the grand total picture, we're out of the crisis. Very gradual 25 bases points lift off and then very slowly increase rate over

the next several years and stop much sooner than you would have before.

QUEST: I promise you, next time you visit us, we will -- times are hard.

JACKSON: We all have to watch our costs.

QUEST: When we come back, we're going to continue talking about U.S. interest rates unchanged. Investors hunt for the clues, in the feds' latest

statement.

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QUEST: Let's continue our discussion on the Fed. Rates were left unchanged as expected. The U.S. Fed has decided not to raise rates, leaving it just

one more chance to hike them before the end of the year.

The Fed, in its statement, said the pace of job gains has slowed. Remember they very concerned about wage inflation but also job creation. It's the

two-part of the jewel mandate. And the Fed said it's also monitoring the global economic slow down, a clear reference, that that is now a major part

of their - or certainly a part of their decision-making.

The Fed made specific reference, it said, to determining whether to raise the target range at the next meeting. Suggesting it could be crucial. Now,

merely by saying that, they have put it on the agenda, thereby setting the stage for a rate rise and you can look at the way the market's reacted.

(BEGIN VIDEO CLIP)

QUEST: This is the Dow, as we go towards -- very interesting, you rarely see this. That's where the announcement comes out. So we've been up

throughout the session, not entirely certain why the market didn't just carry on, why it dropped, re-thought, and I suspect we've got technical

factors there. A very volatile as you look at how investors reacted when the Fed decision was announced.

[17:15:15]

QUEST: The Dow fell more than 100 points, it then regained those losses and then some more to close the session up 200 points.

So, Randall Kroszner is a former governor of the Federal Reserve system, he is currently a professor in economics at The University of Chicago Booth

School. He joins me now. Randall good to see you sir.

So, they didn't do it now but more than we've ever heard before they've telegraphed an intention - all right my interpretation an intention, a

desire. How would you put it?

RANDALL KROSZNER, FORMER GOVERNOR OF FEDERAL RESERVE: I think that's right. I think, as you had said, they explicitly said at the next meeting and they

haven't said that before. They've talked about how a number of things in the economy are now solid rather than just growing modestly. And so, I

think they're setting the table for a potential rise. Certainly something could happened between now and December. But I think they're on a path to

get there unless something goes wrong.

QUEST: And that's a core point now isn't it? Because the one thing they cannot do is take the market by surprise. They've even got a member,

Jeffery Lack, who we're talking about, who's voted for the rise now. So, the stage is set. All we need is the bugle and clowns, and we're off to the

circus.

KROSZNER: Yes. It's quite possible that Janet Yellen will be able to put a little something in people's holiday stocking, especially for the savers

with a little bit more interest.

QUEST: What do you think? Do you think December, bearing in mind what Mike Jackson was saying from AutoNation earlier, we are talking about a quarter

point which is neither here or there in the grand scheme of things even though it does start a process. Do you -- is it your belief they'll do it

in December?

KROSZNER: I think as long there isn't some sort of major disruption? Now certainly you know we could get some bad numbers with respect to jobs, or

inflation starts to go down significantly. I think they clearly are on a path to try to begin to move. And, exactly as you said, it's one quarter of

1 percentage point, and plus or minus three months that shouldn't make a difference. If it doesn't make a difference then there's nothing the Fed

can do anyway, we're in such a precarious state.

QUEST: Right, but what they're going to have to do if they do it in December, they're going to have to make it quite clear that the rate of

progress will not be a repetition of 2004/2006 when it was literally step by step by step, over 15 interest rate moves, pretty much consecutive

meetings.

KROSZNER: That was something we discussed while I was at the Fed. And remember that? I left the Fed back in 2009 when we brought interest rates

down to zero. But we had talked about how the exit strategy would work and I think there was general agreement at that time and I still think it's

there, that it would not be -- (inaudible) at a pace that's likely to be measured. I think they'll move, they'll take a pause, they'll see what the

consequences are and then they might move again. But it's going to be much more gentle.

QUEST: On this question of the exit strategy now, do you believe the plans are fully in place? I was looking at some comments from the Chief Economist

of OECD who is starting to say she's seeing -- not disruptions but she's seeing hiccups in treasury markets, in futures and alike. Do you think that

once this process begins it will be smooth?

KROSZNER: I think we've never been here before. So that anyone to say that with certainty it will be a problem or won't be a problem, it's hard to

say. I think that the Fed has telegraphed this fairly clearly. I think emerging markets have had their tremor, have had their warnings, there's

certainly going to be some volatility, some disruption and there'll probably be some miscommunication on the way because it's all new.

But I think the Fed's going to try to make it as smooth as possible and we'll see if the markets do move smoothly or not. There's going to be some

volatility but hopefully we've gotten some of that behind us already.

QUEST: Now make a note in your calendar now Randall, because December, whatever the FOMCD (second day) we expect you on Quest Means Business to

help us understand what's happening. You're booked.

KROSZNER: Great.

QUEST: Good, send us the bill.

Right, still to come. Thousands of people are still camped out in Calais in France trying to get into the channel tunnel and to the U.K.

(BEGIN VIDEO CLIP)

QUEST: Eurostar's boss is calling for France to act. We'll have that story as Quest Means Business from New York continues.

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[17:22:10]

QUEST: Quest Means Business. At least three migrants drowned off the Greek coast within the last few hours when the wooden boat they were on sank and

hundreds of others were rescued according to Reuters.

(BEGIN VIDEO CLIP)

QUEST: The migrant crisis which has been unfolding in Europe this year has seen thousands of other desperate people risking their lives while on the

move. Some have tried to run into the channel tunnel at Calais causing huge amounts of danger to them and others. Look at the pictures, refugees

risking their lives to enter the tunnel.

It also causes enormous delays to the train service operating.

(END VIDEO CLIP)

QUEST: I spoke to Eurostar's Chief Executive who says the situation is gradually getting better.

NICOLAS PETROVIC, CEO EUROSTAR: First of all, I would say, it's a very sad situation and those people are in very poor conditions and they try - they

try to go through the tunnel. So it was a bumpy ride for us and for our customers over the summer.

In general we had delays, which were not too long in general, but in some cases, quite long delays. So -- but now there is -- it seems that the

situation is stabilizing a lot more and we've got now very few delays due to the migrants. Because I would say the protections are on the tunnel have

been really improved dramatically. So it's getting better but the summer was a difficult operationally.

QUEST: Do you now believe that they have got a handle on this?

PETROVIC: It seems to be - to get better but I think it will - it will - it will need some more - the situation is stabilized short term. But we've got

maybe 8,000 people living next to Calais now who are trying to go through the tunnel and something needs to be done about those people.

So there were (inaudible) measures announced by the French government about them but this will take certainly months to get resolved and it will take

certainly more efforts to find proper long-term solutions for these people.

QUEST: In terms of your own business, looking at the numbers, passengers numbers were up 2% in Q3. Looking at your numbers, you also launched the

first substantial new route, didn't you? I mean to the south of France. It took a long time in the planning but it finally has arrived. What were --

what were your thoughts? Now it's up and running. You had I see 115,000 tickets sold for the service. Is it worth running the service for those

numbers?

PETROVIC: Yes, I mean, it was - it just started since only the month of May and we are going down from London directly to the - actually to the

Mediterranean coast. And actually, we are very pleased with the numbers. They are way better than we expected.

[17:25:04]

PETROVIC: Especially what's new is that the full journey is 6 and a half hours to Marseilles and we thought it would be maybe a bit too long for the

market. But actually it's working very well.

So, there is a market for people who want to have a comfortable journey down to their holiday destinations.

So we will definitely now start to build up on that, and our next destination in a couple of years would be Amsterdam and there the volume

would be much higher.

QUEST: New trains, new routes and new challenges for Eurostar.

The markets in Europe they closed today higher.

(BEGIN VIDEO CLIP)

QUEST: London's FTSE and the DAX in Frankfurt led the way upwards. Good solid gains in Frankfurt, one and a third percent. The CAC and the Zurich

were also managing gains just shy of those sort of levels.

(END VIDEO CLIP)

QUEST: Barclays has picked a Wall Street veteran to be its new chief executive. It was expected but now has become official.

(BEGIN VIDEO CLIP)

QUEST: Jes Staley will start running the bank on the December the 1st. He's got two big tasks ahead; getting its troubled investment operations back on

track, and after the bank's representation was besmirched by the libel scandal, rebuilding trust.

(BEGIN VIDEO CLIP)

QUEST: So, Mr. Staley said in a memo, there can be no retreat from becoming a values driven organization which conducts itself with integrity at all

times.

(END VIDEO CLIP)

QUEST: Strong words from the new Chief Exec. I spoke to the author and former banker, William Cohen and asked him about his thoughts on Jes Staley

as the CEO.

(BEGIN VIDEO CLIP)

WILLIAM COHEN, AUTHOR: I think he's probably the perfect man at the perfect time. They had Bob Diamond, who of course greatly expanded their

investment banking presence, picked up Lehman for a song and probably made a good go of it but he was too aggressive for the tastes of the British.

Then they brought in Anthony Jenkins, and he was probably the wrong man at the wrong time because he did not do what I think the board wanted him to

do. And I think in the case of Jes Staley, having been head of investment banking for a time at JP Morgan and head of an asset management and wealth

management business at JP Morgan, two big businesses that Barclays says, he's in great position to run those businesses the way the board wants them

to be run at Barclays.

QUEST: So, anybody who sees Staley from JP Morgan Chase as being Wall Street back in control at Barclays, throttle, thrust ahead, for investment

banking?

COHEN: No. He's the antithesis of Bob Diamond who has a similar profile but Barclays has learned from the Bob Diamond experiment. Didn't like it for

whatever reason, Jes Staley is the man to sort of have them have a smooth landing away from investment banking back to asset management not unlike

what William Winters, Bill Winters is doing at RBS, also an ex-JP Morgan guy.

(END VIDEO CLIP)

QUEST: Economic gloom is setting in Brazil. The country's finance minister tells me he's not giving up his post.

(BEGIN VIDEO CLIP)

QUEST: That's caused for his resignation to continue to grow. Quest Means Business.

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(COMMERCIAL BREAK)

[17:31:31] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when Brazil's finance minister tells me he won't

quit even in the face of mounting political pressure.

And the chief executive of the Weather Company will tell me why he sold his apps to Big Blue.

Before all of that, this is CNN, and on this network the news always comes first.

A runaway military blimp that floated away from its moorings in the United States of Maryland has now been grounded. It came down in Pennsylvania. A

cable dangling from the blimp took out a number of power lines. An estimated 20,000 people are without electricity.

Republicans in the House of Representatives have nominated Paul Ryan to be the next speaker of the U.S. House. Mr. Ryan who was Mitt Romney's running

mate in the 2012 presidential election is likely to win approval from lawmakers on Thursday morning.

At 45 years of age, he'll be the youngest man to be the speaker since the American Civil War.

Police in Turkey have stormed the offices of an opposition media company in Istanbul. Water cannon and pepper spray were used to disperse a crowd

outside.

The company is linked to an Islamic preacher who is critical of President Erdogan. Turkey heads to the polls on Sunday for the second time in a

year.

The police officer who carried out this violent arrest at a U.S. high school has been fired from his job. Ben Fields lost his job after this

shocking video of the incident became public. He was attempting to arrest a student who had been disrupting the class.

Hundreds of protesters clashed with police in the capital of Nicaragua on Tuesday. They were demonstrating against a $50 billion project for a

Chinese company to carve a canal through the country. It's designed to rival the Panama Canal nearby.

The government says the country needs the investment. Local farmers and environmentalists think it's reckless.

Brazil's finance minister tells me he's not stepping down. Joaquim Levy's under fire as the outlook for the economy gets worse and worse by the day.

Brazil is now predicting a deficit, growth targets have been revised lower, S&P has downgraded Brazil's credit junk to junk status.

Petrobras scandal which continues to affect the entire economy is affecting confidence. The economy's been battered by volatile commodity prices. The

real has lost a third of its value this year.

At the IMF annual meetings in Peru earlier this month, Mr. Levy said he had no regrets about taking the job. This is what he told me.

(BEGIN VIDEOCLIP)

JOAQUIM LEVY, BRAZILIAN FINANCE MINISTER: It's never bad to work for your country and especially when you have a clear objective and this objective

is to prepare our economy to go through this adjustment and really get to a path of growth.

(END VIDEOCLIP)

QUEST: Preparing for adjustment and the path of growth - well since then, Joaquim Levy has faced even more pressure. This time it's even coming from

Brazil's ruling party and the former president.

[17:35:02] I spoke to Joaquim Levy and asked if all this criticism made his job even more untenable.

(BEGIN VIDEOCLIP)

LEVY: I don't really exactly like this. I think we all want growth and we all also know what we need to get growth.

We have to have a robust budget, have to have a clear fiscal outlook and with that I'm very confident that the economy rebound.

A lot of things have happened, we have a lot of people waiting to see what is the fiscal outlook so they can take decisions and start to move.

And, boy, a lot of people want to move at this time and do things because Brazil wants to grow.

QUEST: But the economy - I mean, even the currency continues to be under enormous pressure. So everybody is waiting to see when you are going - or

if you are going - to reverse some of the austerity.

LEVY: I think that what we are going to see is really a rebound of demand and of actions. The economy has shown quite remarkable resilience in this

month of some ambiguity about economic policy.

And now it's time to decide if we have to go through congress with important measures that you support next year's budget. Both at the side

of revenues as well as to decide of cuts and also - particularly - the improvement of some large programs and a discussion about pension reforms.

They're all needed.

QUEST: You, sir, have now become part of the story though, haven't you? And whether you like it or not, the reality is that your continued presence

as finance minister is part of the story.

LEVY: Well I think that the story of a country like other countries that are going through a phase of adjustment. We have seen the global economy

and the really weak situation for many, many years. It has now arrived to Brazil. Mind you, after many years we were spared from all the trouble

that we saw in many developed countries because we had an advantage of the commodity boom.

Well, the boom is over. So we're facing what many countries - the U.S., the U.K., France - many countries - had faced a few years ago we are facing

now.

And I can tell you we have the determination to overcome that.

QUEST: And you don't intend to resign?

LEVY: I'm not planning that. I think that we know in Brazil we are invited by the present to be minister, and I think that's not the real

important point. The point are the policies.

The people - there are many people in Brazil who are very well trained. You probably know many of them. The thing is that we have to explain, to

be very clear about why you have to make some efforts.

We also have to be very clear about what are the prospects of public spending. People are concerned if public spending goes too big because you

might need to raise taxes.

And people what to know if we have to do something now - what are going to get in few years? And this we have to be very clear on saying why.

You have first to fix the fiscal outlook and then you get the rebounding of the economy and then you also have to address some structural issues so

that you can continue to grow so that you can continue to grow after that without the help of commodity prices that you had had in the last few

years.

QUEST: Are you pleased that the Feds today didn't raise rates and are you worried that they will do so in December?

LEVY: Well I think it's a natural thing that sometime the Fed raise rates. It's not natural to have zero interest rate for so long. You know the

trouble of the many economies around the world - the problem of the leverage - excessive leverage - and so on so forth.

But I think the lift up will be a good thing. And it'll be a sign that economies have -

QUEST: Right.

LEVY: -- and you are in a healthy situation.

(END VIDEOCLIP)

QUEST: The finance minister of Brazil talking to me earlier.

Over the last few days you and I have been talking quite a bit about the budget deal, and now according to reports just coming into CNN, (RINGS

BELL) the House has approved the budget deal which will remove next week's default threat.

The Senate most certainly is expected to pass it. It's a two-year budget deal that will take the budget process and particularly the debt ceiling

well into spring of 2017, removing it from the election - presidential election - cycle.

In a moment, where to get a good night's sleep at an airport. The best and worst airports where you can spend the night on a floor or a chair but not

in a hotel.

(COMMERCIAL BREAK)

[17:42:50] QUEST: If you're about to head to the airport, pay attention. A new study's found the best and worst airports where you should spend the

night.

Among the worst is Paris Beauvais and Benazir Bhutto International Airport in Pakistan. Now the best of course is Changi International in Singapore

or Incheon in Seoul.

The problem of course is for frequent travelers - those road warriors. You always end up spending far too much of morning, noon and night in airports.

And eventually, as all the studies found out, eventually the life of a road warrior - those who are hypermobile - it creates depression, emotional

strain, physical anxiety and it quickly takes its toll.

(BEGIN VIDEOCLIP)

UNIDENTIFIED MALE: There's a huge range of physiological costs. If you fly just 85,000 miles a year there's a disruption to the circadian rhythm

that you get through frequent jet lag.

And that has chronic effects when we - when this -- builds up over time. There's a higher risk of heart attack and stroke as well.

QUEST: The reality is clear. Now we need the doctor's opinion - from my colleague Dr. Sanjay Gupta who lives his own hypermobile life.

SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: I think there is a long- term downside. I mean, if you just look at the physical part of this alone, there's - the idea that you age faster, the idea that you're exposed

to more radiation.

I'm not big - that's not a huge concern - but we're exposed to more radiation and we are less likely to eat well, we're more likely to not

exercise - all these types of things.

Emotionally you don't develop relationships, marriages suffer for example. You don't spend as much time with your kids is an overwhelming sense of

guilt among a lot of travelers.

QUEST: That's emotional. Look at the psychological. This idea of loneliness. But it also creates an air of omnipotence. 'I'm traveling the

world.'

GUPTA: It creates a lot of conflicts, certainly within the person because they know what they're really experience, they know the isolation.

But I think almost what you see is an effort to mask that by simply focusing on the glamorization. So what the outside world sees - what they

think is reality - is a much different picture than what the person really inside is feeling, experiencing and doing.

[17:45:06] QUEST: Do you still enjoy it?

BRIAN WHITNEY, VICE PRESIDENT OF SALES, TRAVEL AND ENTERTAINMENT (ph): You know, I think at some point it's hard to say enjoy. It's something that

you can't live without. It's something --

QUEST: Our case study Brian Whitney is playing the game and wears the trophies with pride.

WHITNEY: So I've done about1.6 million on Delta alone. I've been a Platinum member and Diamond member since they had those levels in their

systems. My travel is global.

QUEST: Forty percent of the year he's on the road for work.

WHITNEY: Just this year alone I've been to Europe, Asia, the Middle East, Australia.

QUEST: He's tired and yet he still keeps his hypermobile lifestyle conquering continents.

WHITNEY: It is a love/hate relationship. There is a glamour to it, there's an achievement that game-ified the system to where you really want

to earn that badge, you want to earn that Diamond medallion level, you want to do that.

But yet the toll that it takes on your personal and professional and marital life is significant. But yet we come back and we do this.

QUEST: Do you ever feel lonely on the road?

WHITNEY: It's impossible not to feel lonely on the road - you are alone.

QUEST: Is there a solution to the desires and dreams of the hypermobile life or are we destined to be doomed?

WHITNEY: Any kind of video chat screen time, being able to connect with your family especially with my daughter and my wife in a visual way

UNIDENTIFIED MALE: I think moderation is the key word. That we need to question when we do travel. Can we use virtual communications instead?

GUPTA: You call your friends regularly, you call your family regularly. Continue to do that if you can't (inaudible) from the road.

(END VIDEOCLIP)

QUEST: A life on the road that can be miserable and lonely but a lot of fun. And from a life on the road to business on the move!

(BEGIN VIDEOCLIP)

QUEST: Hyatt is in talks to buy Starwood Hotels and Resorts. If the deal passes go, Hyatt gets St. Regis, the Sheraton and W. And just think of all

those hotels. But it may face competition from Chinese firms instead.

Mark Zuckerberg is defending his efforts to bring free internet to India. He says getting people online is a moral obligation. The critics though

are most certainly not giving the thumbs up, quite the opposite. It's a thumb's down.

They say that the new service offers just a few apps and not full internet access.

The folks at Deezer, they may just be nostalgic for the old days of the wireless. The new streaming device has canceled its IPO. Investors

weren't convinced about the $1 billion value of the company.

That's "Business on the Move."

(END VIDEOCLIP)

QUEST: And while we have "Business on the Move," let's consider how we can "Make, Create, Innovate."

(COMMERCIAL BREAK)

[17:50:48] QUEST: Let me remind you of a developing news story from the United States. A runaway military blimp that floated away from its

moorings in the U.S. state of Maryland has now been grounded. It landed in Pennsylvania. The military said it took no kinetic action to bring it

down.

I think that's a posh way of saying it didn't shoot it down. A cable dangling from the blimp took out a number of power lines. There are 20,000

people now without electric power.

Everybody was watching the weather very closely when the blimp was flying and weather news and weather information is now a crucial and vital part of

most companies in many people's lives.

So it makes sense that IBM's expanded its digital empire to include parts of the Weather Company which is part of the Weather Channel.

Essentially it's bought up everything except the actual TV network. The Weather Company's chief executive David Kenny joins me now from Las Vegas.

Mr. Kenny, how lovely to see you sir. Good to have you. But why - why sell off everything except the TV bit?

DAVID KENNY, CEO, THE WEATHER COMPANY: Well it's terrific to be with you also. The truth is this was a very special deal with IBM.

We've been working with them as a partner and we both saw that to take things to the next level, it would be better if we became one.

And it really did not make a lot of sense for IBM to own a cable channel - that's not a business they're in. I think that channel will do very well

on its own.

It operates quite differently from the bulk of the business and the majority of the employees in the IP are all coming over to IBM.

QUEST: So, it's fascinating. I mean, the Weather Channel itself which has had problems and has had cutbacks as you are very familiar with, that

really goes its own way now.

KENNY: It does. I think there's a lot of options for the Weather Channel as a stand-alone property. But really this focus was about the opportunity

with IBM to better serve our shared customers and to advance the science by combining what we do in the internet of things and what they do in machine

learning and artificial intelligence way of Watson.

QUEST: Now this is fascinating because tell me - I need you, sir, to paint a picture for me of how combining your weather stations, your weather

experience, your weather metrics with Watson and IBM's widgets. What does it give us?

KENNY: Well fundamentally what we've been doing in forecasting is doing a better job of predicting the weather, and we want to move from a predictive

weather service to a cognitive one and IBM's really led the way in cognitive computing.

And what that means is we're not just going to tell people what the weather's going to look like, we're going to tell them what they should do

with it - whether to evacuate, what to wear, how drive, how much energy they're going to need, how to avoid turbulence if you're an airplane pilot.

So increasingly turning weather prediction into weather decision is something we can do together with IBM.

QUEST: It reminds me of the old saying "whether the weather be hot or whether the weather be cold, we'll weather the weather whatever the weather

whether we like it or not." You know the old saying.

But you're saying it is not a question anymore of whether we like it or not. We're going - you're going to try and use that information more than

just I've got to take an umbrella.

KENNY: Well absolutely. So if you - if you looked at the first quarter of this year, 60 percent of the countries in the S&P 500 in America blamed

earnings misses on the weather.

Quite honestly, it's a failure. Because if we could predict the weather, if they could plan ahead, if they could adjust inventories, or they could

adjust staffing with better predictions of what's going to happen, you could vastly reduce the number of weather excuses that a business has to

make.

And the same thing would hold true for consumers.

QUEST: And it's fascinating because this is a massive gamble on your part, isn't it?

KENNY: Well I've always been entrepreneur, so for me I think it's just so exciting to be able to advance weather science and really move it into the

era of cognitive computing.

IBM has a clear leadership position in that, and together we can just move this so much faster.

QUEST: Fascinating.

KENNY: I'd also say -

QUEST: Yes?

[17:55:01] KENNY: -- I'd also say that it's a move into other categories. We can use our technology platform for all sorts of things from healthcare

to insurance to retail.

Our ability to process data and make predictions on unstructured data will work in other categories as well.

QUEST: Fascinating. Sir, thank you for joining us. An interesting story for us this evening. Thank you, I appreciate it. The weather.

We'll have a "Profitable Moment" after the break. "Quest Means Business," good evening (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." So Volkswagen announced a loss, the first in many years and it's because they've now put a charge against

earnings of some $7 billion for the emissions scandal.

You and I and Volkswagen and everybody else knows that that amount of money simply won't be enough. As Claire Sebastian reported tonight, BP and

Macondo was $55 billion and some speculate that the case of Volkswagen it could go as high as $80 billion - it's fine, its penalties, its

compensation, its fixing cars. It's a whole gamut.

The sooner Volkswagen starts to make serious provisions against what's going to be very large costs, the better. But much more important, it goes

to the ethics.

This is not a story about cars, it's a story about ethics and how one of the world's most reputable companies went to badly wrong. Who knew what

when and for how long? That's what this is all about and we don't know.

And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's

profitable. We'll get together tomorrow.

END